November 2013 Newsletter

Welcome to the Four Point HR Newsletter

Distracted Driving May Mean Employer Liability

The Virginia Tech Transportation Institute has shared a study which confirms that a driver who texts is 23 times more likely to have an accident than a non-distracted driver.  They also found that a handheld mobile phone might greatly increase driving risks, making an accident up to six times more likely.  In yet another study conducted by Car And Driver magazine, it has been noted that the reaction time while texting can be twice as long as those individuals who are legally intoxicated.

There are many different kinds of risk associated with the workplace today, but for employers who send employees on company related driving tasks, the damages can be overwhelming when those same employees are talking on their cell phones, or texting while they are driving, or reading instructions from a navigation device while on company-related business.

Consider just a few of the results:

  • An attorney who was talking on a cell phone to a client and hit a 15-year old girl who was walking along the side of a road.  She was killed and the family sued for $25 million dollars.
  • An Arkansas company paid $16.2 million to a woman who was severely disabled in a car accident when a company employee was talking on a cell phone.
  • A jury awarded a judgment of $21 million to a 78 year old who was injured by a salesman’s car when he hit her car while he was talking on his cell phone between appointments.

Even if your state does not restrict texting or the use of a handheld mobile device while driving, failing to adopt a written policy prohibiting these practices by employees may result in undue liability for the employer.  Employers, who take the step of affirming the law in their state, or simply making it an employee policy NOT to talk on the phone or text while driving on company business, may limit the liability that the employer may face in the event of an accident.

Even if your state does not yet regulate the use of hand held mobile devices, or texting, companies should put a policy in place that prohibits these practices and adds specific prohibitions against the use of a laptop computer while driving.

If you should wish to implement a Distracted Driving Policy you should contact Kathryn Schene at Four Point HR who can provide a sample policy regarding the use of cell phones and texting, or the use of a laptop while driving.  If you have a fleet of company owned cars or you issue cell phones to your employees as part of your business protocol, you may also wish to contact your own automobile insurance company to review their suggested policies.

Distracted Driving information is available on a variety of Web sites including the US Department of Labor Distracted Driving web page:  https://www.osha.gov/distracted-driving/index.html.

Employer And Employee Taxes

We are all getting taxed. Understanding which taxes are your responsibilities and which ones belong to your employees can be quite confusing. Below, we have listed the taxes that are applied every pay period.

FICA

The Federal Insurance Contributions Act (FICA) refers to the combined cost of coverage for old age and survivors insurance, disability insurance and Medicare hospital insurance. United States workers are required to contribute to the cost of Social Security/Disability (OASDI) and Medicare hospital insurance (HI).   Employers are required to make contributions for FICA equal to the amount withheld from the employee. The rates are set each year by the Social Security Administration. Commonly it is the employers’ responsibility to pay the employees portion of FICA if it fails to collect the employee’s share of tax.

  • Old age, Survivor & Disability – 4.2 (2011) cutoff of $106,800
  • Medicare Hospital Insurance – 1.45% No Limit

FUTA

Employers, not employees, are responsible for the Federal Unemployment Tax Act (FUTA). This tax provides payments of unemployment compensation to workers who have lost their jobs. United States employers are liable for this tax, which are set by the Federal Government annually. The FUTA tax has a cap of $7000. Once employers have met the FUTA cap, they no longer pay FUTA tax.

SUTA

State Unemployment Tax Act (SUTA) is another tax, which helps with unemployment payouts. The rates are set by each state on an annual basis. It is based on actual unemployment claim experience in each state. SUTA is paid by an employer and is added to a fund that can be used by a worker in the event he or she is becomes unemployed.

WORK STATE/RESIDENT STATE

Most states demand that a State Income Tax be withheld whenever a person is performing work in that state, even if the person’s permanent residence is in another state. If this happens, the employee will be paying the higher of the two state taxes. For example, if an employee lives in California but works in North Carolina, and the California state tax is higher than the North Carolina state tax, North Carolina taxes are withheld in full and California taxes are withheld for the difference between the North Carolina tax and what would have been the total California tax.

In conclusion, we all pay taxes. FICA is a tax that is specific to the employees’ contributions in which the employers match the contribution. FUTA and SUTA help fund unemployment payouts.

Easy Office Morale Boosters

The holidays are coming up and it can be a stressful time in the home and work lives of employees. How can employers help with workplace stress?

“When you inject a level of humor and playfulness, employees find a common ground”, said Carl Robinson, VP of Organizational Psychologist.

It is extraordinary how the morale in an office increases when an employee feels appreciated. Since we all can get caught up the hustle and bustle of our hectic work we have adapted 7 easy morale boosters which help you and your employees to loosen up and feel better.

  • Have a communal lunch just because. Create a space that says, “You are here today, Thank you!”
  • Put up a communal bulletin board. In our office, we post lunch specials from local restaurants, coupons, funny cartoons, jokes, and interesting articles.
  • Create a spirit day! It could be a monthly or weekly event. Try Funky Smock Fridays, Bad Sweater Monday or Twins Tuesday.  Be sure to check the schedule for in office meetings or visitors that day.
  • Host a potluck. With our ever-growing nation, you likely have employees of different cultures working for you. Hosting a potluck is a great way to recognize the diversity of your workforce.
  • Take candid shots of employees, office events, philanthropic support, and the like. Post them throughout your office where staff and visitors can see and enjoy. Candid shots are a great way to help employees let loose and laugh.
  • Most importantly, laugh! Laughter really is the best medicine.

Try out a few and see what works best for your and your employees.

Surviving A Tax Audit

You have just received a notice from the IRS that you or your business is going to have to undergo a tax audit.  Immediate panic might set in.  Why me?  What do I need to do?  No need to panic. We’ll help you understand and navigate the dreaded IRS audit.

So, just what is a tax audit?  When the IRS comes knocking on your door to conduct an audit, they are looking to confirm and validate items that have been listed on your personal or corporate tax return.

The IRS typically conducts 3 types of audits:

  • Correspondence Audit: All interaction between you and the IRS are done mailing documentation back and forth.  This type of audit usually happens when documentation from a 3rd party happens to show a difference.
  • Office Audit: This is where the IRS will set up a time and a place for you to bring the appropriate documentation to the auditor for examination.  Most of the time, these types of audits are used to review items that are usually significant in nature, on your tax return.
  • Field or Home Audit: For this audit, the auditor will come to your place of business or to your home.  These types of audits are usually extensive and require review of documents to prove the accuracy of line items on your tax return.  It is always recommended to have a tax professional with you to help with all the requests from the auditor.

Once you know the type of audit, there are a few important steps to follow:

  • It is critical to read the notice carefully.  All IRS notices received do not necessarily mean that you are going to be subject to a full-blown audit.  The IRS could be requesting further documentation concerning a line item on the tax return.  In other cases, the IRS could be notifying you that they discovered a line error on your return and all that is needed is to file an amended tax return.
  • Get professional help if you are unsure about the IRS notification.  Not everything in the IRS code is black and white.  There are many shades of gray when it comes to the IRS code.  This is where you should seek help from a tax professional to help you with your audit whether it is your personal tax return or your business tax return.
  • Only provide what the auditor has requested.  Don’t be tempted to volunteer any additional information because that could possibly lead the auditor to look at other items and open up further examination of items.  Answer the auditor’s questions honestly and concisely.  If you are unsure of the answer to a question, politely let the auditor know that you will have to look into that particular item.

Once you receive the proposed tax assessment, have a tax professional review it to make sure it is correct and to determine if there is an opportunity to appeal the tax.

If you owe tax but cannot afford the payment, the IRS has set up many on a payment plan or schedule.  Often, you may be better off securing a loan from your bank or pay for the assessment than using your credit card.

And finally, the IRS may ask business owners to agree to extend the look back period just because they are too busy to review your return and corresponding documentation, by the time the statue of limitations runs out.  In those cases, the auditor may ask you to waive the statue of limitations.  Do not agree to waive the statue of limitations wit out consulting with you tax professional.

Business Tax Breaks

Several favorable business tax provisions have a limited term life that may dictate taking action between now and year-end. They include the following two provisions:

Section 179 Deduction

Your business may be able to take advantage of the temporarily increased Section 179 deduction. Under the Section 179 deduction privilege, an eligible business can often claim first-year depreciation write-offs for the entire cost of new and used equipment, software, and eligible real property costs. For tax years beginning in 2013, the maximum Section 179 deduction is $500,000, including up to $250,000 for qualifying real property costs. However, you cannot claim a Section 179 write-off that would create or increase an overall business tax loss. For tax years beginning in 2014, the maximum deduction is scheduled to drop back to only $25,000, and most real property costs will be ineligible.

50% First-year Bonus Depreciation

Above and beyond the Section 179 deduction, your business can also claim first-year bonus depreciation equal to 50% of the cost of most new (not used) equipment and software placed in service by December 31 of this year. For a new passenger auto or light truck that’s used for business and is subject to the luxury auto depreciation limitations, the 50% bonus depreciation break increases the maximum first-year depreciation deduction by $8,000. The 50% bonus depreciation break will expire at year-end unless Congress extends it.

SOURCE: Forrestall CPAs, Buford, GA

For Our Clients

Four Point HR Is Growing
We welcome Bonnie Leger, Director of Benefits to Four Point HR. She will handle all benefits-related inquiries and can be reached at bleger@fourpointhr.com or 404.419.0202.

Free Webinar: The New Separation Form
This webinar is for clients only and will review the changes we have made at Four Point HR to our separation and termination processes. The Agenda is as follows:

  • Introduction to the new Separation Form
  • Why did we make a change?
  • Completing the New Separation Form
  • How do we use the reverse side of the Form?
  • What is the implementation timeline?

REGISTER NOW: https://student.gototraining.com/r/8299482453836155392

New Risk Management Email Address
We have set up a new email address for our clients: riskmanagement@fourpointhr.com. Clients should use this email address when:

  • Requesting a workers’ compensation certificate of insurance
  • Reporting all employee work-related claims
  • Emailing all claims documents and updates

Requesting any information, letters and documents concerning loss runs, experience rating, classification and employee coding.